£1+ a day Mortgage OP challenge for April

unkster

fairyclicks wrote: »

Very clear thanks kmcld2 my daily interest rate is £2.47 so i may have to aim for £2.50 a day :-P hehehehe

Hi, this is my 1st post on this site, i have come across this, that doesn't look right from what i can gather from your info of 60k at 2.50% using the guide kmcld2 put up i worked your daily interest out to be £4.10. I'm sorry if i've got it wrong but thought it needed pointing out.

HelenDaveKids

I have been Op'ing at the end of every month as got fed up of doing bits very early on but really pleased to know made financial sense! Also my op's tend to be money saved rather than money have...

kmcld2

Hi,

I originally got the information here for working out the daily interest on mortgages if anyone would like a look. I've found another site which I'll put a link to later when I've finished work that looks quite interesting.

Kelly.

unkster

kmcld2 wrote: »

Hi,

I originally got the information or working out the daily interest on mortgages if anyone would like a look. I've found another site which I'll put a link to later when I've finished work that looks quite interesting.

Kelly.

Hi Kelly, the formula you put up was the one i had already used before i saw it on here. Which is why i was surprised at fairyclicks' daily interest being lower than mine even though my mortgage is £30k lower.

fairyclicks

unkster wrote: »

Hi, this is my 1st post on this site, i have come across this, that doesn't look right from what i can gather from your info of 60k at 2.50% using the guide kmcld2 put up i worked your daily interest out to be £4.10. I'm sorry if i've got it wrong but thought it needed pointing out.

HI unkster thanks for popping on and querying the calculations - my interest rate is actually 1.5% so i think i'm right with the numbers - feel free to correct me tho if i do have it wrong

Not been about the past couple of days cos been visiting mummio and getting fed there hehehehe that gives me another couple of pounds into the pot also filled up the car with diesel at a lower priced petrol station saving about £1.60 than using my local one Going to add £4 to the OP pot for all that which brings me up to £10/£30!

I also finally got hold of my mortgage people who seemed to have no idea what i was talking about when i asked about how overpayments were allocated eventually i asked when the interest was added and it is monthly - not sure if that is the right info??? I'm thinking this means paying a larger sum on my repayment day or as close to it as possible would be the best option for me? going to go and play with some calculations to see if i can get it into my head a bit better

kittiej

One more pound saved on lunch today so the little pot is growing nicely, I might just have to do this every month

See what you've started now fairyclicks

fairyclicks

kittiej wrote: »

One more pound saved on lunch today so the little pot is growing nicely, I might just have to do this every month

See what you've started now fairyclicks

Yes its good isn't it? just thinking about saving a little bit to pay off the mortgage makes it seem quite painless

TheWebDev

fairyclicks wrote: »

I also finally got hold of my mortgage people who seemed to have no idea what i was talking about when i asked about how overpayments were allocated eventually i asked when the interest was added and it is monthly - not sure if that is the right info??? I'm thinking this means paying a larger sum on my repayment day or as close to it as possible would be the best option for me? going to go and play with some calculations to see if i can get it into my head a bit better

Hi fairyclicks,

I think you need to ask them:

• to confirm if interest is calculated daily (and if so)
• if a small mid-month overpayment reduces the capital straightaway, or if it pays the interest that has accumulated so far.

Hopefully if you are this clear and direct with your questions they can answer them. I think it's best to ask boolean questions (yes / no, true / false answers), when you want to be ascertain these types of facts.

Lois_E

FWIW, I agree with unkster's calculation for IR of 2.5% and also with fairyclicks's calculation for IR of 1.5%. Aren't we all good at maths.

TheWebDev has good advice about asking very simple questions to get accurate answers. The other thing is not to be fobbed off by a junior member of staff who doesn't actually know the answers, but make sure you talk to someone who really understands how these things are done.

Having said that, even if we limit our discussion to mortgages whose OPs are allocated in the "interest first" way that's been described, I can't think of any cases where it would actually be advantageous to wait and pay money off later. If your OP is big enough to cover this month's interest so far, then it's worth paying now. If it isn't, then if you pay it off now, it goes towards the interest, and then the capital gets reduced on normal payment day as less of your normal payment is needed for interest, but this is no better and no worse than waiting until normal payment day to make the OP.

For this reason, there's only any point in stockpiling OPs to pay on the payment day if you also bother to put the money somewhere where it can earn interest while it's waiting to by OPed. If the money's going to wait in a current account earning nothing, then you might as well OP it straight away.

fairyclicks

TheWebDev wrote: »

Hi fairyclicks,

I think you need to ask them:

• to confirm if interest is calculated daily (and if so)
• if a small mid-month overpayment reduces the capital straightaway, or if it pays the interest that has accumulated so far.

Hopefully if you are this clear and direct with your questions they can answer them. I think it's best to ask boolean questions (yes / no, true / false answers), when you want to be ascertain these types of facts.

I did ask both these questions and yes interest is calculated daily (which i already knew) and i tried to ask the second one in about 5 different ways. I even said "if i made an extra £10 payment during the month would that reduce the amount i owe on my mortgage rather than just coming off the interest? her response was "how would you pay that when you have no DD set up?" I gave up at that point as i already told her i had an arrangement to transfer money into my mortgage account about 3 times i think i just need to talk to someone else LOL!